Question

On January 1, 2018, the Excel Delivery Company purchased a delivery van for $52,000. At the end of its five-year service life, it is estimated that the van will be worth $4,000. During the five-year period, the company expects to drive the van 150,000 miles.

Required:
Calculate annual depreciation for the five-year life of the van using each of the following methods.

1. Straight line.
2. Sum-of-the-years’-digits.
3. Double-declining balance.
4. Units of production using miles driven as a measure of output, and the following actual mileage

Answer 1

depreciation = 9600
2) sum of the digit = n*(n+1)/2
sum of the digit = 5*(5+1)/2
sum of the digit = 15
base of depreciation = cost-residual value
base of depreciation = 52000-4000 =48000
yrs	base (1)	rate of dep(2)	depreciation (1*2)
2018	48000	5/15	16000
2019	48000	4/15	12800
2020	48000	3/15	9600
2021	48000	2/15	6400
2022	48000	1/15	3200
			48000
3) Double decline method = 100%/5year*2 = 40%
years	book value	rate of dep	depreciation
2018	52000	40%	20800
2019	31200	40%	12480
2020	18720	40%	7488
2021	11232	40%	4492.8
2022	6847.5	40%	2739
			48000
4) actual mileage not provided in question without that can not solve 4 part